Formosa Plastics Corp (台灣塑膠) yesterday gave a bright outlook for the petrochemical sector on the back of improving economic growth momentum worldwide.
Earnings in the first half of this year are expected to improve from a year ago, Formosa Plastics president Jason Lin (林健男) said on the sidelines of a shareholders’ meeting in Taipei.
In the first quarter, the company saw its pretax earnings rise 62 percent annually to NT$10.7 billion (US$353.99 million), Lin said.
The company, the nation’s largest producer of polyvinyl chloride, posted a net profit of NT$9.89 billion, or earnings per share of NT$1.55, for last quarter, a 73.1 percent increase from NT$5.71 billion in the same period last year, buoyed by soaring oil prices and improving demand, he said.
Gains made last quarter coincided with a number of policies implemented by the Chinese government aiming to cut oversupply and environmental impacts, Lin said, adding that the operations of some of the company’s peers were disrupted by equipment failures, leading to higher product prices that helped offset rising material costs.
Sales this quarter will receive a boost during the yearly high season on the back of rising shipments of polyvinyl chloride and acrylonitrile products, he added.
Shareholders approved plans to distribute a cash dividend of NT$4.6, the highest in six years, the firm said, adding that the distribution is based on last year’s record-high net profit of NT$39.39 billion, or earnings per share of NT$6.19.
It also represented a 5.12 percent dividend yield based on the stock’s closing price of NT$89.8 yesterday.
Asked about Hon Hai Precision Industry Co (鴻海精密) chairman Terry Gou’s (郭台銘) strong criticism yesterday of the government’s inefficiency, Lin said that each company has its own perspective, adding that Taiwan remains the preferred investment destination of Formosa Plastics and its parent, Formosa Plastics Group (FPG, 台塑集團).
The firm’s investments in the US were driven by a need to access cheaper petrochemical materials produced by the US’ shale oil industry, he added.
Formosa Petrochemical Corp (台塑石化), an oil refining subsidiary of FPG, intends to continue applying for approval to carry out a NT$17 billion fourth-phase expansion at its naphtha cracker in Yunlin County, after the plan was halted by the Environmental Protection Administration.
The agency in March ordered the company to conduct a new environmental impact assessment, following six years of assessment by the government.
Lin said the expansion plans include a partnership to build carbon fiber composites with Asahi Kasei, a Japanese chemical company that also found the agency’s directive baffling.
The plant could help with the government’s goals of developing its own military aircraft and warships, he added.
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